By Aaron Tilley

For Microsoft Corp. Chief Executive Officer Satya Nadella, buying TikTok would mark the boldest in a string of big deals and could reshape a tech giant that has lately thrived by focusing on corporate customers.

Microsoft is in talks to potentially spend billions of dollars to acquire the U.S. operations of TikTok, the Chinese-owned video-sharing app, The Wall Street Journal and others reported Friday. The discussions come as President Trump said that he was considering steps that would effectively ban the app from the U.S. A Microsoft spokesman declined to comment.

Mr. Nadella, chief executive since 2014, has already used deal-making to bolster Microsoft's reach, but an acquisition of TikTok would depart from the path he has steered toward more of a focus on products and services for business.

The company that soared to dominance on the back of its Windows operating system software has had a mixed experience with consumer-facing businesses. Its Xbox gaming platform is successful, and it has expanded its line of Surface computers, but its search engine Bing has struggled to gain traction against Google. And Microsoft largely abandoned the smartphone business after Mr. Nadella took over.

Microsoft, in June, shut down its live-streaming service Mixer, and it said it was working to move the service's community of broadcasters and viewers over to Facebook Inc. Days later it said it was permanently closing its retail stores that were already shuttered during the pandemic. Microsoft's existing social network, LinkedIn, is focused on professionals.

A TikTok deal "would be a big bet on the consumer social media space, which the company has stayed away from over the last decade," said Dan Ives, an analyst at Wedbush. "An aggressive acquisition (or strategic investment) of TikTok would be Microsoft throwing its hat in the ring and trying to compete with other tech giants such as Facebook in a new avenue of growth for the next decade for its consumer business," he said in a note Friday.

TikTok's large user base of young people does overlap with that of Xbox, which is Microsoft's biggest business that is wholly consumer-focused, enjoying 65% sales growth in the last quarter. Xbox has become hugely popular during the pandemic with people stuck at home, and it is expected to enjoy a further boost this year when Microsoft launches a new gaming console. Videogames have increasingly come to function as social-media networks of their own, with players interacting and chatting in real-time over the internet.

"For Microsoft, getting an audience like TikTok's would be very positive, " said Brad Reback, an analyst at Stifel Financial Corp. "I'm sure there are all kinds of ways to monetize and integrate back into Xbox."

An acquisition could also bring risks, particularly when regulators in the U.S. and abroad are growing wary of the broad power of the biggest tech companies. It would also come as social-media companies have drawn increased scrutiny over how they moderate political speech on their platforms, an area of controversy Microsoft has been able to avoid.

"I'm not sure what would be the huge value proposition to Microsoft doing this given the regulatory environment we're in," said Bernstein Research analyst Mark Moerdler.

The CEOs of some of the biggest U.S. tech companies were grilled in Congress this past week over their dominance and deal-making in the midst of growing antitrust concerns in Washington. Microsoft, which had its own run-in with regulators on antitrust matters two decades ago, wasn't in the spotlight, though rivals have accused it of unfair practices.

A deal would pull Microsoft into the increasingly tense political dynamics between the U.S. and China, which have clashed over technology, foreign policy and other issues. The White House pushed for the sale of TikTok's U.S. business after expressing concern it could pass on the data it collects from Americans streaming videos to China's government, something the social-media company said it wouldn't do. A TikTok deal, people familiar with the matter said, would also involve TikTok's Beijing-based parent, ByteDance Ltd., and the White House, signaling Microsoft may have the Trump administration's blessing for a transaction.

A purchase of part of TikTok would deepen Microsoft's exposure to consumers, an area where it has repeatedly stumbled. Under Mr. Nadella's predecessor, Steve Ballmer, the company spent $7.2 billion on Nokia Corp.'s mobile- phone business, only to take a $7.6 billion writeoff on the deal. Consumer efforts under Mr. Ballmer, such as the Zune portable media player that was designed to compete with Apple Inc.'s iPod, as well as the television and movie studio Xbox Entertainment Studios, were scrapped.

Mr. Nadella, instead, focused on corporate businesses, including the booming cloud-computing field, helping to revive Microsoft's fortunes and restoring it to being one of America's most valuable companies.

Microsoft's biggest acquisitions under Mr. Nadella have all targeted corporate customers. It closed in 2016 its biggest deal ever, the roughly $26 billion acquisition of LinkedIn. Its largest deal since then was the $7.5 billion agreement two years ago to buy the coding-collaboration site GitHub Inc., which underpinned Mr. Nadella's effort to transform the software giant beyond its legacy products and focus on fast-growing areas such as cloud computing.

"Under Satya, they've really spent energy in doing more enterprise-related acquisitions," said Ubaid Dhiyan, a director at the technology-focused investment bank Union Square Advisors LLC.

One notable exception came with Mr. Nadella only a few months in the top job, when Microsoft spent $2.5 billion in 2014 on Mojang AB, maker of the "Minecraft" videogame, in a bid to reach a younger audience.

Microsoft has undertaken 21 transactions in the past 12 months alone, according to FactSet, with a combined value of around $2.3 billion. Those have largely been smaller deals to strengthen the company's cloud-computing offering.

A deal for TikTok would require Microsoft to diversify in a way that it hasn't yet under Mr. Nadella, said S. Somasegar, a former Microsoft corporate vice president who left in 2015 and is now a managing director at the Seattle venture capital firm Madrona Venture Group. But there is an element that is consistent with previous acquisitions, he said.

"If you look at the major acquisitions over the last five years or so," he said, "the common theme is to acquire a vibrant community of customers that is both critical and net new add to the Microsoft community."

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Write to Aaron Tilley at aaron.tilley@wsj.com

Corrections & Amplifications

This article was corrected August 2, 2020 to reflect that Union Square Advisors LLC is a technology-focused investment bank. The original version incorrectly called it a venture-capital firm.